Clayton Christensen’s The Innovator’s Dilemma changed the way people think about building a sustainable business that also innovates and creates new value. Christensen redefined the word ‘disruptive’ and gave it a nice shiny gloss. What’s news here? In this blog I’m going to look at two things that can stymie innovation: appetite for risk and fear of the unknown.
Focusing on keeping your sustainable business going requires paying attention to customer needs, watching the bottom line, understanding the difference between revenue and profit and maintaining pricing advantage over competing products or services. It’s basically sticking to your knitting, and arguably, it doesn’t work. Sometimes it pays to look at the bright shiny object, the thing that threatens to disrupt your business, and go all-out for innovation.
As many businesses have discovered, you have to stick to your knitting, and then do more – take risks, in fact – to sustain forward momentum while creating an environment that rewards innovation. Risk here is less about financial exposure than it is about fear of the unknown. As an example, simply doing what you have to do to keep your business going ignores the effects of technological change and culture change, expressed as daily life – what we could call ‘the unexpected,’ which is fraught with risk. Recent business history is littered with companies or industries which failed to tackle the risk of factoring for the effects of change – Blockbuster’s fall from grace, the withering of broadcast news, the near-death of print media and the irrelevance of music companies stand out.
Innovation is not a core competency in most companies. A few outliers exist – Apple is the clear poster child – but for most organizations, just keeping up with business-as-usual is a full -time job. Risk avoidance, on the other hand, is a core competency.
Committing resources to anticipating risk and managing for change is something most CEOs, CFOs and boards are uncomfortable with; they fail to see any immediate value. It’s risk, and no one wants to front-load risk in the form of ‘the unexpected’ into a spreadsheet. (Of course anyone who’s read an S1 knows the front matter is loaded with ‘risks’, but those are usually risks in the context of the business as it is presented to the financial markets, not risks the business must anticipate as a daily innovation exercise – ‘the unexpected’.)
All of which leads to the point of this blog: it’s really tough to build an innovative business. There are exceptions, of course – Hubspot (not a client,) Black Duck Software and SpeedBump (clients.) VCs are more conservative these days; tech talent is frustrated by how difficult it is to break through with innovative, risky ideas, and the business media is focused on covering organizations with national footprints, not innovative startups with tons of potential but no ticker symbol.
How do we bring innovation and an appetite for risk back to Boston?
Here are a few ideas to embrace disruption and risk in the quest for innovation:
- Ask your customers where their businesses are going. Not what they need today, but in one or three or five years. Our client Black Duck does this at their Customer Summit, and they act on what they hear. But other companies who try this may be surprised. If your customers can’t answer with something that is surprising, your business is in trouble (and so are theirs.)
- Ask your employees what they need to be creative. If you don’t give employees incentive to be creative, your business is in trouble.
- Revisit the notion of ‘incentive.’ It may not be money that interests your most creative people. They may be yearning for challenge, change, recognition and risk. Reward them by making these part of their job descriptions.
- Ask your peers what they think the NE region needs to regain preeminence as a hub for innovation. Scott Kirsner does this at the Nantucket Conference, but don’t wait. Start the discussion now, and make sure to talk a lot about risk and the unknown.
- Take risks. Writing this is a risk, for example. Committing to living this way would be a much bigger risk.
Clayton Christensen took risks when he wrote his book. His ideas were challenging and innovative; they disrupted many assumptions executives hold dear. He’s a local hero. There are many others. Take a look at your business’s leaders and think of ways to help them create innovation. It’s a good way to spend time on a cold, rainy Boston day.
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Technorati Tags: Black Duck, Clayton Christensen, HubSpot, innovation, Speedbump, The Innovator's Dilema
